How AI is reshaping supply chain risk management strategies
In the supply chain game, the next disruption is always around the corner. With ongoing geopolitical issues, climate-related events, labor disruptions, and more, established supply chains continue to be hit by sudden upsets. Fortunately, fewer companies are operating in the dark by investing in AI-powered supply chain resilience.
AI plays an essential part in reshaping supply chains through better analytics, enhanced visibility and increased accuracy. It is key to organizations moving from a reactive approach to supply chain risk management (SCRM), to a proactive one.
In this article, we take a closer look at four ways organizations are using AI to improve their SCRM strategies to stay ahead of disruptions.
Supply chain mapping
Many companies have some visibility into where suppliers and contractors are located around the world. However, the indirect tiers (Tier 2+ and below) are where approximately 85 percent of disruptions happen.
To rapidly gain insights into their most likely suppliers, companies can start by utilizing AI-powered mapping. However, coupling this with multi-tier, supplier-validated mapping will provide the most accurate picture of an organization’s entire supplier network. Having full visibility and knowledge enables companies to get a head start when a disruption strikes.
For example, the ongoing disruption to supply in the Red Sea in 2024 highlights why this is so important. Shipping delays have impacted anything from furniture to some of the largest automakers globally. In February, EV manufacturer, Tesla, was forced to shut down a factory near Berlin from January 29 to February 11 due to prolonged shipment delays.
By investing in AI and supplier-validated mapping, down to the indirect tiers, businesses can identify where their supply chains are reliant on regions at risk of geopolitical conflict right down to the part level.
Identifying risks in real time with 24/7 AI monitoring
There is great potential in what predictive AI models can enable organizations to achieve. For instance, by scanning data sets of tens of thousands of text sources, AI can identify and predict which disruptions will negatively impact a company’s supply chain down multiple tiers. This is what Resilinc’s global AI-powered risk monitoring solution, EventWatchAI, achieves; helping organizations proactively prepare for disruptions through real-time alerts.
What’s more, predictive AI models can also be used to track purchase orders and commodities, giving organizations insight into delays and material prices in real-time. By watching commodities with this level of precision, businesses can effectively track where future supply shortages may occur and identify alternative sources in advance.
Increasing security through risk-scoring
AI is fundamental to the future of SCRM. Whether it’s optimization, increasing accuracy, or identifying vulnerabilities in supply, ongoing innovation makes effective and secure SCRM a possibility for businesses of all sizes. Risk scoring is just one of these innovations. AI can be used to highlight suppliers with vulnerable practices like links to materials originating from China’s Xinjiang Uyghur Autonomous Region (XUAR), for example.
Through in-depth supplier audits on risk types like compliance or cyber-attacks on IT and OT systems, and the wider supply chain, businesses can pinpoint exactly where their weaknesses lie. As due diligence reporting requirements increase, AI will give organizations an upper hand in identifying suppliers that may be linked to non-compliance when it comes to issues like forced labor. Collaborating with suppliers to solve the problem is then possible, but if the risk to an organization remains high, finding alternative sourcing may be necessary to maintain compliance.
From reactive to proactive
As data becomes even more important to a company’s day-to-day operations, a proactive approach to SCRM is even more important. The rise of cyber-attacks is a real threat that could take manufacturing offline and jeopardize supply. Take the example of semiconductor manufacturing in Taiwan. Taiwan produces around 90 percent of the world’s advanced microchips, but it faces 15,000 cyber-attacks every second. By staying proactive and addressing weaknesses in advance of issues emerging, businesses will be better prepared for the next inevitable disruption – even avoiding it altogether.
AI’s role in improving SCRM is game-changing, making supply chains more responsive and resilient than ever. But to reap the rewards, businesses must invest in tools like multi-tier mapping and AI-powered 24/7 risk monitoring. Only then will they have the tools to improve visibility, pinpoint weaknesses, and remove vulnerabilities in the supply chain.
Sumit Vakil is the Co-founder and CPO at Resilinc, where he is responsible for Resilinc’s product and technology vision, direction, and delivery. With 25 years of experience bringing innovative technologies to market, Sumit has served in leadership roles at successful startups as well as Fortune 500 companies like Brocade and Cisco.